Credit cards vs. debit cards

Category: Debt


They may seem similar, but credit cards and debit cards have distinct differences. So what are the differences and similarities, and which is best suited for you?


A credit card is basically a loan. When a cardholder charges on it, they are borrowing money from the issuer, and they will eventually need to pay it back. Transactions are computed and billed on a monthly basis, and the user has the option of making small or minimum monthly payments, or paying back the balance in full. On the other hand, a debit card is either a prepaid card, or is linked to the customer’s checking account. In either situation, the funds available on a debit card are ones that the owner has already loaded onto the card or that are automatically debited from the checking account. Credit cards do not have PIN numbers, but debit cards do.



Debit cards don’t come with monthly bills that you need to pay back, annual fees, or interest rates. Debit cards can give you access to cash in your bank account, whereas credit cards can make it possible to make large purchases that you might not have the money for at the moment. The use of a debit card does not affect your credit score, but the use of a credit card does.



They look identical and make it easy to pay for things anywhere a credit card is accepted and/or required—for example, online shopping. Popular card types, such as Visa®, may be available as both debit cards and credit cards.


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Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.

Tags: credit cards, Debit Cards, loans

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